What is The Essays of Warren Buffett about?

The Essays of Warren Buffett is Lawrence Cunningham's thematic compilation of Warren Buffett's annual letters to Berkshire Hathaway shareholders, spanning from the 1970s through the year of publication. The letters themselves are widely considered the best annual reports written by any CEO in history — clear, honest, occasionally funny, and full of direct explanation of how Buffett thinks about business, accounting, corporate governance, and investing. Cunningham reorganized the material from chronological to thematic, which makes the book a more useful reference than reading the raw letters.

The compilation covers Buffett's investment philosophy in its fullest articulation: the difference between price and value, the importance of understanding businesses before owning their shares, the role of competitive advantage (what Buffett calls the economic "moat"), his preference for buying wonderful companies at fair prices over mediocre companies at cheap prices, and the irreplaceable importance of management integrity. These themes recur across decades of letters as Buffett returns to the same ideas with different examples.

The corporate governance sections are distinctive. Buffett is unusually direct about the failures of the typical American board — directors who treat their roles as social positions, who are unwilling to challenge management, who lack genuine economic skin in the game. He is equally critical of accounting practices that inflate reported earnings and of financial engineering that creates the appearance of progress without the substance. These sections read as prescient against the backdrop of the accounting scandals of the early 2000s.

The accounting discussion is perhaps the most technically demanding part of the book. Buffett distinguishes between reported earnings and owner earnings — the cash a business actually generates for its owners after reinvestment — and argues that accounting-driven earnings analysis often misleads more than it illuminates. His critique of goodwill amortization, pooling-of-interests accounting, and stock option expensing (written when options were not required to be expensed) demonstrates that he understood the gap between accounting reality and economic reality decades before it became a mainstream concern.